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Ripple CEO Criticizes Former SEC Head's Statements on Regulatory Actions

Brad Garlinghouse comments on former SEC Chair Jay Clayton's regulatory stance after Ripple lawsuit developments.

Sun, 29 Oct 2023, 11:02 am UTC

Brad Garlinghouse, Ripple's chief executive officer, recently expressed his dissatisfaction with comments made by Jay Clayton, the former head of the U.S. Securities and Exchange Commission (SEC). Since the early months of 2023, the SEC has taken significant regulatory steps concerning various cryptocurrency platforms and related entities.

During a conversation with CNBC on June 29, 2023, Clayton voiced his belief that the SEC's legal actions should be reserved for situations where the agency has confidence in its legal standing. He emphasized the importance of regulatory bodies initiating legal actions that they genuinely believe can withstand legal scrutiny. However, considering the recent decision by the SEC to drop accusations without prejudice, Garlinghouse pointed out that Clayton had previously led a lawsuit against Ripple, which appeared to have a weak foundation.

Highlighting Clayton's involvement, Garlinghouse recalled how Clayton initiated the lawsuit against both him and Ripple's co-founder, Christian Larsen. The day after filing the lawsuit, Clayton stepped down from his official duties. The initial lawsuit, filed in December 2020, accused Ripple, Garlinghouse, and Larsen of conducting an "unregistered, continuous digital asset securities offering" through XRP token sales, amassing over $1.3 billion.

Complicating the matter, Clayton's remarks in June 2023 became a subject of discussion, particularly in light of the recent developments related to the lawsuit against Garlinghouse and Larsen. Notably, by October, the SEC decided to withdraw the charges against the Ripple leaders.

Adding to Ripple's defense, a decision in July by Judge Analisa Torres revealed that the XRP token sales to the general public did not meet the standard legal definition of a security. However, the court did find that Ripple violated certain securities laws when promoting XRP tokens directly to major investors.

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